Financial top brass leading reengineering efforts, survey finds.

Business process reengineering will make an important contribution to improving an organization's effectiveness and efficiency, said 62% of controllers responding to a survey by the Institute of Management Accountants. Top financial officers were playing a leading role in these efforts, the survey found.

Which areas in finance were the reengineers targeting? Accounts payable ranked first, followed by financial reporting, cost accounting and accounts receivable. Payroll and travel and entertainment activities also were mentioned.

According to Reengineering the Finance Function, which reports on a poll of 374 U.S. companies with annual sales ranging from approximately 1 million to $10 billion and up, 47% of the respondents said financial officers were spearheading the process at their companies: 28% cited the chief financial officer and 19% mentioned the controller. Forty percent said their chief executive officers were leading, 11% cited their chief operating officers and 2% said others were doing this.

Sixty percent of the respondents said they were involved in reengineering programs, and 8% said their companies were not but they believed they should be. Thirty-one percent of them said their companies were not involved in such efforts; the remainder did not reply to the question. (Responses to a number of questions do not add up to 100% because some respondents did not reply to them.

Forty percent of the controllers thought reengineering was contributing to improving the performance of their companies. Only 9% said they thought such efforts were a fad, and 15% said it was too early to tell.

Because reengineering was still in the early stages at many organizations, only a quarter of the respondents considered their companies' projects successful, 45% said it was too soon to tell and 3% believed they had failed. The main reason for failure, according to the respondents, was a lack of support by top management; the second most common reason given was unrealistic goals.

Why reengineer? Among the reasons most often cited were to improve productivity, to improve key business processes and to improve internal and external customer satisfaction. Other reasons listed were to reduce the number of employees and to introduce significant software and hardware development projects.

Although the controllers generally believed reengineering in the financial area would "lead to a positive outcome" for them and their companies, they weren't sure about how the finance department would be affected.

The number-one reengineering tool reported was benchmarking, which identifies areas that need improvement by comparing one company's performance with that of other organizations. "This is most likely because many reengineering designs call for initial benchmarking to serve as a catalyst for the effort," according to Jonathan B. Schiff, IMA technical adviser. Other tools used were process mapping, cycle-time measurement, process-level performance measurement, activity-based costing information and statistical process control, according to respondents.

The American Institute of CPAs provides benchmarking, through a management consulting firm, for companies with at least $50 million in annual revenue as a free service to members. See JofA, Aug. 19, page 76, for more details, or call John Morrow at [phone] for information on how to participate in the program.

For more information about the survey, contact the IMA at [phone].